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Use the following information of Alfred Industries. Standard manufacturing overhead based on normal monthly volume: Fixed...

Use the following information of Alfred Industries.

Standard manufacturing overhead based on normal monthly volume:
Fixed ($303,400 ÷ 20,000 units) $ 15.17
Variable ($100,000 ÷ 20,000 units) 5.00 $ 20.17
Units actually produced in current month 18,000 units
Actual overhead costs incurred (including $300,000 fixed) $ 383,800

Compute the overhead spending variance and the volume variance. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)

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Overhead Spending Variance = $     20,306 Favorable
Overhead Volume Variance = $     30,340 Unfavorable
Workings:
Overhead Spending Variance
actual overhead - Overhead Budgeted
$                     3,83,800 - $                                   3,93,400 = $     20,306 Favorable
Overhead Budgeted = (18000 X $5) + $303400
= $                                   3,93,400
Overhead Volume Variance
Fixed overhead rate X (Actual units produced - Budgeted production units)
$                           15.17 X (18000 - 20000) = $     30,340 Unfavorable

ekkarill92 answered 8 months ago
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